Arbitrage forex - is the purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related forex market, in order to take advantage of small price differentials between markets.

Ask price - is the price at which the forex trading market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At ask price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buy one US dollar for 1.4532 Swiss francs.

Bar Chart it is a type of chart which consists of four significant points: the high and the low prices, which form the vertical bar, the opening price, which is marked with a little horizontal line to the left of the bar, and the closing price, which is marked with a little horizontal line of the right of the bar.

Base Currency - is the first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215 then one USD is worth CHF 1.6215 In the online forex trading markets, the US Dollar is normally considered the base currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

Bretton Woods Agreement it is agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rates for the major currencies.

Japanese Candlestick Chart - is a chart that indicates the trading range for the day as well as the opening price and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.

Carry Trade refers to the simultaneous selling of a currency with a low interest rates, while purchasing currencies with higher interest rates. Examples are the JPY crosses such as GBP/JPY and NZD/JPY.

Central Bank it is government or quasi-governmental organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve Bank, and the German central bank is the Bundesbank.

Closed Position exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will 'square' the postion.

Currency Basket - is a selected group of currencies in which the weighted average is used as a measure of the value or the amount of an obligation. A currency basket functions as a benchmark for regional currency movements - its composition and weighting depends on its purpose.

The principal goal of the EMU Union is to establish a single European currency called the Euro, which will officially replace the national currencies of the member EU countries in 2002. On Janaury1, 1999 the transitional phase to introduce the Euro Currency began. The Euro now exists as a banking currency and paper financial transactions and foreign exchange are made in Euros. This transition period will last for three years, at which time Euro notes an coins will enter circulation. On July 1,2002, only Euros will be legal tender for EMU participants, the national currencies of the member countries will cease to exist. The current members of the EMU Union are Germany, France, Belgium, Luxembourg, Austria, Finland, Ireland, the Netherlands, Italy, Spain and Portugal.

Glossary forex term "Forward Contract" - is the pre-specified Exchange Rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.

A Futures Contract from forex glossary - an obligation to exchange a good or instrument at a set price on a future date. The primary difference between Future (forex) and Forward (forex) is that the Futures are typically forex online traded over an exchange (Exchange-Traded Contracts - ETC), versus fx forwards, which are considered (OTC) Over the Counter Contracts. An forex glossary term OTC is any contract NOT traded on an exchange.

Head and Shoulders Chart - is a technical analysis term used to describe a chart formation in which a stock's price: rises to a peak and subsequently declines, then, the price rises above the former peak and again declines, and finally, rises again, but not to the second peak, and declines once more. The first and third peaks are shoulders, and the second peak forms the head.

A Hedge Fund - is an aggressively managed portfolio of investments that uses advanced investment strategies such as Financial Leverage, Long Position, Short Position and derivative position in both domestic and international markets with the goal of generating high returns.

Instant Execution - is the mechanism of providing quotes to the client without prior request. The client receives the Quotes Flow in real-time and can send an instruction to make a Transaction forex anytime.

Forex Leverage - the ratio in respect of Margin and Transaction Size: 1:33, 1:100, 1:200, 1:300, 1:400, 1:500. e.g. the ratio 1:100 means that in order to make a deal the required amount on the trading account is hundred times less than transaction size.

Limit Order - is an Order forex with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50)

Locked Positions - Long Position and Short Position of the same size opened on the trading account for the same instrument. For example, if the client opens two buy lots, and three sell lots for the same instrument, then two buy lots and two sell lots are identified as locked positions, and one buy lot is identified as non-locked position.

Manifest Error - is an error of Forex Dealer who opens/closes a position or executes an Order forex at the price which significantly differs from the price of this instrument in the Quotes Flow at the moment of performing this action, or any other dealer’s act or omission in respect of the prices which are significantly different from online forex market prices.

Necessary Margin is demanded by the company, this is the sum of money that needs to support Opened Positions. For each tool this sum will be determined by credit holder and the value of the opening position.

Pip forex (point) - the minimum value of the change in the cost of currency. Usually it is the second or the fourth decimal sign after the point, that is 0,01 or 0,0001 accordingly. See also:Tick forex.

Stop Loss Order - ia an order type whereby an Open Position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.

Thin Market - is the market in which Quote forex in forex trading platform are rare as opposed to the normal market conditions. Such conditions are usual for Christmas, national holidays in G7, from 20:00 till 00:00 GMT etc.

The theoretical gain or loss on Open Position valued at current market rates, as determined by the Forex Broker in its sole discretion. Unrealized Gains Losses become Profit/Loss when position is closed.

The Uptick Rule - in the U.S., a regulation whereby a Security forex may not be sold short unless the last trade prior to the short sale was at a price lower than the price at which the short sale is executed.

Value Date - is the date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments. For spot currency transactions, the value date is normally two business days forward.

Variation Margin - funds Forex Broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.

The WTO - International government organization (with over 120 members) designed to shape an international trade system; it was created in 1994 as the GATT successor. WTO headquater is in Geneva. Although the Soviet Union was a member of the GATT, Russia is not a member of WTO yet.

Forex ECN broker provide access to an electronic trading network, supplied with streaming quotes from the top tier banks in the world. By trading through an ECN broker, a currency trader generally benefits from greater price transparency, faster processing, increased liquidity and more availability in the marketplace.

Straight Through Processing (STP) in our forex glossary - is a direct order execution. In this model, the brokerage company is an intermediary between clients and providers of liquidity. Clients orders in the STP model are automatically sent to the provider of liquidity, while Forex Broker gets a commission and a portion of the spread. In this model, the brokerage company is interested in increasing the volume of trades, because it makes profit by taking commission for each Transaction forex. There is no conflict of interest between the broker doing STP and his client.